HUBSPOT INC

Previous wording

Breeze is our AI that powers the customer platform, including our Smart CRM, engagement Hubs, and the connected ecosystem. Our engagement Hubs that enable companies to attract, engage, and delight customers throughout the customer lifecycle include Marketing, Sales, Service, Operations, Content and Commerce. The Smart CRM is the foundational context layer that combines customer data with AI to power the entire customer platform with unified customer profiles and tools to manage and govern your team and business processes. Our customer platform features a central database of lead and customer interactions and integrated applications designed to help businesses build their presence online, attract prospects across channels, convert prospects into leads, close leads into customers, transact with those customers, and delight them so they become promoters of those businesses.

Current wording

AI is integrated throughout our agentic customer platform, including our Smart CRM, engagement Hubs, and the connected ecosystem. Our engagement Hubs that enable companies to attract, engage, and delight customers throughout the customer lifecycle include Marketing, Sales, Service, Operations, Content and Revenue. The Smart CRM is the foundational context layer that combines customer data with AI to power the entire customer platform with unified customer profiles and tools to manage and govern your team and business processes. Our customer platform features a central database of lead and customer interactions and integrated applications designed to help businesses build their presence online, attract prospects across channels, convert prospects into leads, close leads into customers, transact with those customers, and delight them so they become promoters of those businesses.

Previous wording

We focus on selling to mid-market business-to-business, or B2B, companies, which we define as companies that have between 2 and 2,000 employees. While our customer platform was built to grow with any company, we focus on selling to mid-market businesses because we believe we have significant competitive advantages attracting and serving this market segment. These mid-market businesses seek an integrated, easy-to-implement and easy-to-use solution to reach customers and compete with organizations that have larger marketing, sales, and customer service budgets. We efficiently reach these businesses at scale through our traditional and AI-enhanced engagement strategies, our Solutions Partners, and our “freemium” model. AI-enhanced engagement strategies leverage AI to personalize, automate, and optimize how businesses attract, engage, and retain customers across channels and throughout the customer lifecycle. A Solutions Partner is a service provider that helps businesses with strategy, execution, and implementation of go-to-market activities and technology solutions. Our freemium model attracts customers who begin using our customer platform through our free products and then upgrade to our paid products. As of March 31, 2026, we had 9,021 full-time employees and 299,458 Customers of varying sizes in more than 135 countries, representing many industries.

Current wording

We focus on selling to mid-market business-to-business, or B2B, companies, which we define as companies that have between 2 and 2,000 employees. While our customer platform was built to grow with any company, we focus on selling to mid-market businesses because we believe we have significant competitive advantages attracting and serving this market segment. These mid-market businesses seek an integrated, easy-to-implement and easy-to-use solution to reach customers and compete with organizations that have larger marketing, sales, and customer service budgets. We efficiently reach these businesses at scale through our traditional and AI-enhanced engagement strategies, our Solutions Partners, and our “freemium” model. AI-enhanced engagement strategies leverage AI to personalize, automate, and optimize how businesses attract, engage, and retain customers across channels and throughout the customer lifecycle. A Solutions Partner is a service provider that helps businesses with strategy, execution, and implementation of go-to-market activities and technology solutions. Our freemium model attracts customers who begin using our customer platform through our free products and then upgrade to our paid products. As of June 30, 2026, we had 9,016 full-time employees and 306,446 Customers of varying sizes in more than 135 countries, representing many industries.

Previous wording

We derive most of our revenue from subscriptions to our cloud-based customer platform and related professional services, which consist of customer on-boarding, training and consulting services. Subscription revenue accounted for 98% of our total revenue for the three months ended March 31, 2026 and 2025. We sell multiple product plans at different base prices on a subscription basis, each of which includes our Smart CRM and integrated applications to meet the needs of the various customers we serve. We also generate revenue through usage and consumption-based models. Customers pay additional fees if the number of contacts stored and tracked in the customer’s database exceeds specified thresholds. We also generate revenue based on the purchase of additional subscriptions, products and seats. Most of our Customers’ subscriptions are one year or less in duration.

Current wording

We derive most of our revenue from subscriptions to our cloud-based customer platform and related professional services, which consist of customer on-boarding, training and consulting services. Subscription revenue accounted for 98% of our total revenue for the six months ended June 30, 2026 and 2025. We sell multiple product plans at different base prices on a subscription basis, each of which includes our Smart CRM and integrated applications to meet the needs of the various customers we serve. We also generate revenue through customer usage of our consumption-based products. Customers pay additional fees if the number of contacts stored and tracked in the customer’s database exceeds specified thresholds. We also generate revenue based on the purchase of additional subscriptions, products and seats. Most of our Customers’ subscriptions are one year or less in duration.

Previous wording

Many of our customers purchase on-boarding, training, and consulting services, which are designed to help customers enhance their ability to attract, engage and delight their customers using our customer platform. Professional services and other revenue accounted for 2% of total revenue for the three months ended March 31, 2026 and 2025.

Current wording

Many of our customers purchase on-boarding, training, and consulting services, which are designed to help customers enhance their ability to attract, engage and delight their customers using our customer platform. Professional services and other revenue also include Payments, our end-to-end payment solution, as well as our Stripe payment processing integration, both built within Revenue Hub. Professional services and other revenue accounted for 2% of total revenue for the six months ended June 30, 2026 and 2025.

Previous wording

We believe that the growth of our business is dependent on many factors, including our ability to expand our customer base, increase adoption of our customer platform within existing customers, develop new products and applications to extend the functionality of our customer platform and provide a high level of customer service. We have invested and intend to continue investing for long-term growth. We intend to continue to invest in sales and marketing to support our growth, including investments in AI-enabled tools for guided selling and content generation designed to drive efficiencies and improve conversion rates. We plan to continue to invest in research and development as we continue to introduce new products and applications to extend the functionality of our customer platform, including machine learning capabilities intended to accelerate innovation and increase productivity. We intend to continue maintaining a high level of customer service and support which we consider critical for our continued success, and investing in AI to support automated ticket resolution. We also plan to continue investing in our data center infrastructure and services capabilities in order to support continued future customer growth. We also expect to continue to incur additional general and administrative expenses as a result of our growth and the infrastructure required to operate as a public company, including continued efforts to automate and streamline processes using AI-enabled tools. We expect to use our cash flow from operations to fund these growth strategies and support our business.

Current wording

We believe that the growth of our business is dependent on many factors, including our ability to expand our customer base, increase adoption of our customer platform within existing customers, develop new products and applications to extend the functionality of our customer platform and provide a high level of customer service. We have invested and intend to continue investing for long-term growth. We intend to continue to invest in sales and marketing to support our growth, including investments in AI-enabled tools for guided selling and content generation designed to drive efficiencies and improve conversion rates. We plan to continue to invest in research and development as we continue to introduce new products and applications to extend the functionality of our customer platform, including the use of AI-enabled tools and machine learning capabilities intended to accelerate innovation and increase productivity. We intend to continue maintaining a high level of customer service and support which we consider critical for our continued success, and investing in AI to support automated ticket resolution. We also plan to continue investing in our services capabilities in order to support continued future customer growth. We also expect to continue to incur general and administrative expenses as a result of our growth and the infrastructure required to operate as a public company, including continued efforts to automate and streamline processes using AI-enabled tools. We expect to use our cash flow from operations to fund these growth strategies and support our business.

Previous wording

Subscription-based revenue is derived from customers using our customer platform for their marketing, sales, service, data, and content management needs. Our customer platform includes a system of record for maintaining a unified view of the customer experience, a system of engagement for efficiently engaging customers through AI agents, SEO, AEO, AI-powered content creation, web content, social, blogging, email, marketing automation, messaging, support ticketing, knowledge base, conversation routing, video hosting, deal progression, prospecting, and data enrichment. Over 2,000 integrations and applications are available for our users, across a wide range of categories, including integrations with leading social media, email, sales, video, analytics, content and webinar tools. All subscription fees that are billed in advance of service are recorded in deferred revenue. Subscription based revenue is recognized net of consideration paid to Solutions Partners when those Solutions Partners purchase the subscription to our customer platform.

Current wording

Subscription-based revenue is derived from customers using our customer platform for their marketing, sales, service, data, and content management needs. We sell multiple product plans at different base prices on a subscription basis, each of which includes our Smart CRM and integrated applications to meet the needs of the various customers we serve. All subscription fees that are billed in advance of service are recorded in deferred revenue. Subscription based revenue is recognized net of consideration paid to Solutions Partners when those Solutions Partners purchase the subscription to our customer platform. We also generate revenue through usage, including HubSpot Credits, which are consumed when customers use our AI agent products across our customer platform, and other consumption-based offerings. Usage fees that are billed in advance of consumption are recorded in deferred revenue.

Previous wording

Cost of subscription revenue consists primarily of managed hosting providers and other third-party service providers, employee-related costs including payroll, benefits and stock-based compensation expense for our customer support team, amortization of capitalized software development costs and acquired technology, and allocated overhead costs, which include facilities costs, depreciation of fixed assets, and costs related to information technology.

Current wording

Cost of subscription revenue consists primarily of managed hosting providers and other third-party service providers, including AI inferencing costs, employee-related costs including salaries, benefits, bonuses, and stock-based compensation expense for our customer support team, amortization of capitalized software development costs and acquired technology, and allocated overhead costs, which include facilities costs, depreciation of fixed assets, and costs related to information technology.

Previous wording

Cost of professional services and other revenue consists primarily of personnel costs of our professional services organization, including salaries, benefits, bonuses and stock-based compensation, amortization of capitalized software development costs associated with Payments, as well as professional fees and allocated overhead costs, which we define as facilities, depreciation of fixed assets, and costs related to information technology. It also consists of costs associated with Payments and our other service offerings.

Current wording

Cost of professional services and other revenue consists primarily of personnel costs of our professional services organization, including salaries, benefits, bonuses, stock-based compensation, amortization of capitalized software development costs associated with Payments, as well as professional fees and allocated overhead costs, which include facilities, depreciation of fixed assets, and costs related to information technology. It also consists of costs associated with Payments and our other service offerings.

Previous wording

We expect that the cost of subscription and professional services and other revenue will increase in absolute dollars as we continue to invest in data center infrastructure and capitalize software development costs for new offerings to grow our business and scale with AI capabilities. As a result of these investments, over time, we expect gross margins to decline slightly, exclusive of stock-based compensation.

Current wording

We expect that the cost of subscription and professional services and other revenue will increase in absolute dollars as we continue to invest in our infrastructure and capitalize software development costs for new offerings to grow our business and scale with AI capabilities. As a result of these investments, over time, we expect gross margins to decline slightly.

Previous wording

Research and development expenses consist primarily of personnel costs of our development team, including payroll, benefits and stock-based compensation expense, professional and contractor fees and allocated overhead costs. We capitalize certain software development costs that are attributable to developing new products and adding incremental functionality to our customer platform and amortize such costs as costs of subscription and cost of professional services and other revenue over the estimated life of the new product or incremental functionality, which is generally two years. We also capitalize certain development costs that are attributable to developing our internally developed software platforms and amortize such costs throughout the consolidated statement of operations over the estimated life of our internally developed software platforms, which is generally five years. We focus our research and development efforts on improving our products and developing new ones, delivering new functionality and enhancing the customer experience. We believe delivering new functionality for our customers is an integral part of our solution and provides our customers with access to a broad array of options and information critical to their marketing, sales, and customer service efforts. We expect to continue to make investments in and expand our offerings to enhance our customers’ experience and satisfaction and attract new customers. Over time, we expect research and development expenses to increase in absolute dollars as we continue to increase the functionality of our customer platform and decline as a percentage of total revenue, exclusive of stock-based compensation expense.

Current wording

Research and development expenses consist primarily of personnel costs of our development team, including salaries, benefits, bonuses, stock-based compensation expense, professional and contractor fees and allocated overhead costs, which include facilities costs, depreciation of fixed assets, and costs related to information technology. We capitalize certain software development costs that are attributable to developing new products and adding incremental functionality to our customer platform and amortize such costs as cost of subscription and cost of professional services and other revenue over the estimated life of the new product or incremental functionality, which is generally two years. We also capitalize certain development costs that are attributable to developing our internally developed software platforms and amortize such costs throughout the consolidated statement of operations over the estimated life of our internally developed software platforms, which is generally five years. We focus our research and development efforts on improving our products and developing new ones, delivering new functionality and enhancing the customer experience. We believe delivering new functionality for our customers is an integral part of our solution and provides our customers with access to a broad array of options and information critical to their marketing, sales, and customer service efforts. We expect to continue to make investments in and expand our offerings to enhance our customers’ experience and satisfaction and attract new customers. Over time, we expect research and development expenses to increase in absolute dollars as we continue to increase the functionality of our customer platform and decline as a percentage of total revenue, exclusive of stock-based compensation expense.

Previous wording

General and administrative expenses consist of personnel costs and related expenses for executive, finance, legal, human resources, employee-related information technology, administrative personnel, including payroll, benefits and stock-based compensation expense, professional fees for external legal, accounting and other consulting services, and allocated overhead costs. We expect that general and administrative expenses will increase on an absolute dollar basis as we incur the costs of compliance associated with being a publicly traded company, and remain relatively consistent as a percentage of total revenue, exclusive of stock-based compensation expense, as we focus on processes, systems and controls to enable our internal support functions to scale with the growth of our business.

Current wording

General and administrative expenses consist of personnel costs and related expenses for executive, finance, legal, human resources, employee-related information technology, administrative personnel, including salaries, benefits, bonuses, stock-based compensation expense, professional fees for external legal, accounting and other consulting services, and allocated overhead costs, which include facilities costs, depreciation of fixed assets, and costs related to information technology. We expect that general and administrative expenses will increase on an absolute dollar basis as we incur the costs of compliance associated with being a publicly traded company, and remain relatively consistent as a percentage of total revenue, exclusive of stock-based compensation expense, as we focus on processes, systems and controls to enable our internal support functions to scale with the growth of our business.

Previous wording

Interest income primarily consists of interest earned on invested cash and cash equivalents balances and investments. Interest expense primarily consists of amortization of issuance costs and contractual interest expense related to our 2025 Notes and Revolving Credit Facility. Other expense, net primarily consists of the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities and any gains, losses on, or impairments of our strategic investments.

Current wording

Interest income primarily consists of interest earned on invested cash and cash equivalents balances and investments. Interest expense primarily consists of amortization of issuance costs and contractual interest expense related to our 2025 Notes and Revolving Credit Facility. Other (expense) income, net primarily consists of the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities and any gains, losses on, or impairments of our strategic investments.

Previous wording

Results of Operations for the Three Months Ended March 31, 2026 and 2025

Current wording

Results of Operations for the Three and Six Months Ended June 30, 2026 and 2025

Previous wording

Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025

Current wording

Three and Six Months Ended June 30, 2026 Compared to the Three and Six Months Ended June 30, 2025

Previous wording

Subscription revenue increased during the three months ended March 31, 2026 compared to the same period in 2025 primarily due to the increase in Customers, which grew from 258,258 as of March 31, 2025 to 299,458 as of March 31, 2026. In addition, Average Subscription Revenue per Customer increased from $11,038 for the three months ended March 31, 2025 to $11,722 for the three months ended March 31, 2026. The growth in Customers was primarily driven by increased demand for our lower-priced Starter products. The increase in Average Subscription Revenue per Customer was primarily driven by increased demand for our Professional and Enterprise products and the impact of foreign currency translation primarily attributable to the decrease in the value of the U.S. Dollar relative to the Euro and British Pound Sterling, partially offset by continued purchases of our lower-priced Starter products.

Current wording

Subscription revenue increased during the three months ended June 30, 2026 compared to the same period in 2025 primarily due to the increase in Customers, which grew from 267,982 as of June 30, 2025 to 306,446 as of June 30, 2026. In addition, Average Subscription Revenue per Customer increased from $11,310 for the three months ended June 30, 2025 to $11,800 for the three months ended June 30, 2026. The growth in Customers was primarily driven by increased demand for our lower-priced Starter products. The increase in Average Subscription Revenue per Customer was primarily driven by continued adoption of our Professional and Enterprise products and the impact of foreign currency translation primarily attributable to the decrease in the value of the U.S. Dollar relative to the Euro and British Pound Sterling, partially offset by continued purchases of our lower-priced Starter products.

Previous wording

Total cost of revenue for the three months ended March 31, 2026 increased compared to the same period in 2025 primarily due to an increase in subscription and hosting costs, amortization of capitalized software development costs, amortization of acquired technology, employee-related costs and allocated overhead expenses. Gross margins remained relatively consistent year-over-year.

Current wording

Total cost of revenue for the three and six months ended June 30, 2026 increased compared to the same period in 2025 primarily due to an increase in subscription and hosting costs, amortization of capitalized software development costs, amortization of acquired technology, employee-related costs and allocated overhead expenses. Gross margins remained relatively consistent year-over-year.

Previous wording

The increase in subscription cost of revenue for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to the following:

Current wording

The increase in subscription cost of revenue for the three and six months ended June 30, 2026 compared to the same period in 2025 was primarily due to the following:

Previous wording

Subscription and hosting costs increased primarily due to growth in our Customer base from 258,258 as of March 31, 2025 to 299,458 as of March 31, 2026. We also incurred higher subscription and hosting costs as we continued to support increased usage of our customer platform and continued investments to expand AI functionality. Amortization of capitalized software development costs increased due to the increased number of developers working on our software platform as we continued to develop new products and increased functionality. Employee-related costs increased as a result of increased headcount as we grew our support organization to support our customer growth and improve service levels and offerings. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure as we continued to grow our business and slight increase in the proportional allocation of shared company expenses associated with headcount in subscriptions cost of revenue.

Current wording

Subscription and hosting costs increased primarily due to growth in our Customer base from 267,982 as of June 30, 2025 to 306,446 as of June 30, 2026. We also incurred higher subscription and hosting costs as we continued to support increased usage of our customer platform and continued investments in AI-enabled tools to expand AI functionality. Amortization of capitalized software development costs increased due to the increased number of developers working on our software platform as we continued to develop new products and enhance functionality. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure as we continued to grow our business.

Previous wording

The increase in professional services and other cost of revenue for three months ended March 31, 2026 compared to the same period in 2025 was primarily due to the following:

Current wording

The changes in professional services and other cost of revenue for three and six months ended June 30, 2026 compared to the same periods in 2025 were primarily due to the following:

Previous wording

Commerce payment processing fees increased due to higher payment volume and merchant activity. Professional fees increased and employee-related costs decreased as we continue to leverage our Solutions Partners to deliver on-boarding and other professional services. Allocated overhead expenses decreased primarily due to the decreased proportional allocation of shared company expenses associated with headcount in services cost of revenue.

Current wording

Revenue Hub Payment processing fees increased due to higher payment volume and merchant activity. Professional fees increased and employee-related costs decreased as we continue to leverage our Solutions Partners to deliver on-boarding and other professional services. Allocated overhead expenses decreased primarily due to the decreased proportional allocation of shared company expenses associated with headcount in services cost of revenue.

Previous wording

The increase in research and development expense for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to the following:

Current wording

The changes in research and development expense for the three and six months ended June 30, 2026 compared to the same periods in 2025 were primarily due to the following:

Previous wording

The increase in sales and marketing expense for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to the following:

Current wording

The increase in sales and marketing expense for the three and six months ended June 30, 2026 compared to the same periods in 2025 were primarily due to the following:

Previous wording

Employee-related costs increased as a result of increased headcount as we expanded our selling and marketing organizations to grow our customer base. Marketing programs increased due to the timing and size of certain marketing efforts as we made investments in attracting new customers. Professional fees increased due to an increase in the use of third party services and contractors for our marketing efforts. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure to support our business growth. Software and services cost increased due to an increase in the use of third party software and AI-enabled tools to improve productivity. Solutions Partner commissions decreased as we changed the duration and eligibility of commissions for certain Solutions Partners to better align with the value delivered to customers. The decrease from the change in duration and eligibility of commissions was partially offset by increased revenue generated through our Solutions Partners.

Current wording

Employee-related costs increased as a result of increased headcount as we expanded our selling and marketing organizations to grow our customer base. Solutions Partner commissions increased due to increased revenue generated through our Solutions Partners, partially offset by a decrease due to the change in the duration and eligibility of commissions for certain Solutions Partners to better align with the value delivered to customers in the first quarter of 2025. Marketing programs increased due to the timing and size of certain marketing efforts as we made investments in attracting new customers. Software and services cost increased due to an increase in the use of third party software and AI-enabled tools to improve productivity. Professional fees increased due to an increase in the use of third party services and contractors for our marketing efforts. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure to support our business growth and increased proportional allocation of shared company expenses associated with headcount in sales and marketing.

Previous wording

The increase in general and administrative expense for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to the following:

Current wording

The changes in general and administrative expense for the three and six months ended June 30, 2026 compared to the same periods in 2025 were primarily due to the following:

Previous wording

Employee-related costs increased as a result of increased headcount as we grew our business and required additional personnel to support our expanded operations. Customer credit card fees increased due to increased customer transactions as we continued to grow our business. Professional fees increased primarily due to increase in the use of third-party services and contractors. Allocated overhead expenses increased due to an increase in shared company expenses associated with our systems and infrastructure as we continued to grow our business.

Current wording

Customer credit card fees increased due to increased customer transactions as we continued to grow our business. Professional fees increased primarily due to increase in the use of third-party services and contractors. Allocated overhead expenses increased primarily due to the increased proportional allocation of shared company expenses associated with headcount in general and administrative. Employee-related costs decreased primarily due to lower expense associated with our share-based payment awards.

Previous wording

Restructuring charges in the three months ended March 31, 2026 and 2025 consisted of variable facilities-related costs on unused space.

Current wording

Restructuring charges in the three and six months ended June 30, 2026 and 2025 consisted of variable facilities-related costs on unused space.

Previous wording

The decrease during the three months ended March 31, 2026 is primarily due to lower average investment balances driven by cash outlays from our 2025 Notes settlement in the first half of 2025, Share Repurchase Programs and lower yields.

Current wording

The decrease during the three and six months ended June 30, 2026 is primarily due to lower average investment balances, driven by the use of cash to settle our 2025 Notes and fund our Share Repurchase Programs, and lower yields.

Previous wording

The change in other income (expense) during the three months ended March 31, 2026 is primarily due to the following:

Current wording

The change in other (expense) income during the three and six months ended June 30, 2026 is primarily due to the following:

Previous wording

The decrease in the impairment of strategic investments is due to an impairment of $1.6 million in the first quarter of 2025 compared to $0.9 million in the same period in 2026. The increase in gain on strategic investments is due to gains of $0.7 million from observable price changes in the value of certain strategic investments in the first quarter of 2026 compared to $0.1 million in the same period in 2025. The change in foreign currency gains and losses is primarily attributable to the value of the U.S. Dollar relative to the Euro and British Pound Sterling.

Current wording

The increase in the impairment of strategic investments is due to an impairment of $2.4 million in the second quarter of 2026 compared to no impairment in the same period in 2025. The decrease in gain on strategic investments is due to gains of $0.1 million from observable price changes in the value of certain strategic investments in the second quarter of 2026 compared to $1.8 million in the same period in 2025. The change in foreign currency gains and losses is primarily attributable to the value of the U.S. Dollar relative to the Euro and British Pound Sterling.

Previous wording

The decrease in the income tax expense is primarily from a reduction in U.S. tax expense as a result of the pattern in which pre-tax income is realized throughout 2026 as compared to 2025.

Current wording

The increase in the income tax expense is primarily from an increase in U.S. tax expense as a result of the pattern in which pre-tax income is realized throughout 2026 as compared to 2025.

Previous wording

We will continue to maintain a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance. However, given our anticipated future earnings, management believes that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to reach a conclusion that all or a portion of the valuation allowance may no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. The exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.

Current wording

We will continue to maintain a full valuation allowance on our U.S federal and state deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of this allowance. However, given our anticipated future earnings, management believes that there is a reasonable possibility that within the next 12 months, sufficient positive evidence may become available to reach a conclusion that all or a portion of the valuation allowance may no longer be needed. Release of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded. The exact timing and amount of the valuation allowance release are subject to change on the basis of the level of profitability that we are able to actually achieve.

Previous wording

The following table shows cash and cash equivalents, working capital, net cash and cash equivalents provided by operating activities, net cash and cash equivalents provided by investing activities, and net cash and cash equivalents used in financing activities for the three months ended March 31, 2026 and 2025.

Current wording

The following table shows cash and cash equivalents, working capital, net cash and cash equivalents provided by operating activities, net cash and cash equivalents provided by investing activities, and net cash and cash equivalents used in financing activities for the six months ended June 30, 2026 and 2025.

Previous wording

Our cash and cash equivalents at March 31, 2026 were held for working capital purposes. At March 31, 2026, $329.5 million of our cash and cash equivalents was held in accounts outside the United States. We do not assert indefinite reinvestment of our foreign earnings because these earnings have been subject to United States Federal tax. While we have concluded that any incremental tax incurred upon ultimate distribution of these earnings to be immaterial, our current plans do not demonstrate a need to repatriate undistributed earnings to fund our U.S. operations.

Current wording

Our cash and cash equivalents at June 30, 2026 were held for working capital purposes. At June 30, 2026, $357.5 million of our cash and cash equivalents was held in accounts outside the United States. We do not assert indefinite reinvestment of our foreign earnings because these earnings have been subject to United States Federal tax. While we have concluded that any incremental tax incurred upon ultimate distribution of these earnings to be immaterial, our current plans do not demonstrate a need to repatriate undistributed earnings to fund our U.S. operations.

Previous wording

Net cash and cash equivalents provided by operating activities during the three months ended March 31, 2026 primarily reflected our net income of $32.6 million, $40.2 million of depreciation and amortization, $115.7 million in stock-based compensation, $2.5 million of unrealized currency translation, impairments of strategic investments of $0.9 million, and $0.1 million of amortization of debt discount and issuance costs, offset by non-cash expenses that included $6.8 million accretion of bond discounts, gains on strategic investments of $0.7 million, and $0.1 million of benefit from deferred income taxes. Working capital sources of cash and cash equivalents primarily included a $58.4 million decrease in accounts receivable related to increased collection, $38.4 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period,

Current wording

Net cash and cash equivalents provided by operating activities during the six months ended June 30, 2026 primarily reflected our net income of $75.9 million, $84.6 million of depreciation and amortization, $244.2 million in stock-based compensation, $2.6 million of unrealized currency translation, impairments of strategic investments of $3.0 million, and $0.2 million of amortization of debt discount and issuance costs, offset by non-cash expenses that included $10.3 million accretion of bond discounts, gains on strategic investments of $0.6 million, and $1.8 million of benefit from deferred income taxes. Working capital sources of cash and cash equivalents primarily included a $33.9 million decrease in accounts receivable related to increased collection, $59.5 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period, $3.5 million increase in accounts payable related to timing of bill payments, $32.7 million increase in accrued expenses and other liabilities, and $13.9 million decrease in right-of-use asset. These sources of cash and cash equivalents were offset by $57.8 million increase in prepaid expenses and other assets, $38.1 million increase in deferred commissions, and $23.9 million decrease in operating lease liabilities.

Previous wording

Net cash and cash equivalents provided by operating activities during the three months ended March 31, 2025, primarily reflected our net loss of $21.8 million, $28.8 million of depreciation and amortization, $116.7 million in stock-based compensation and an impairment of strategic investments of $1.6 million, $0.5 million of amortization of debt discount and issuance costs, offset by non-cash expenses that included $14.0 million accretion of bond discounts, and $2.7 million of unrealized currency translation. Working capital sources of cash and cash equivalents primarily included a $39.4 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period, a $45.7 million decrease in accounts receivable related to increased collection, a $18.0 million increase in accounts payable related to timing of bill payments, and a $6.4 million decrease in right-of-use asset. These sources of cash and cash equivalents were offset by a $26.4 million increase in prepaid expenses and other assets, a $7.5 million decrease in operating lease liabilities, a $27.2 million increase in deferred commissions, and $1.2 million decrease in accrued expenses and other liabilities.

Current wording

Net cash and cash equivalents provided by operating activities during the six months ended June 30, 2025 primarily reflected our net loss of $25.1 million, $62.0 million of depreciation and amortization, $257.7 million in stock-based compensation, an impairment of strategic investments of $1.6 million, and $0.6 million of amortization of debt discount and issuance costs, offset by non-cash expenses that included $24.4 million accretion of bond discounts, a gain on strategic investments of $1.9 million, and $2.8 million of unrealized currency translation. Working capital sources of cash and cash equivalents primarily included a $63.9 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period, a $30.0 million decrease in accounts receivable related to increased collection, a $9.1 million increase in accounts payable related to timing of bill payments, a $59.9 million increase in accrued expenses and other liabilities, and a $12.8 million decrease in right-of-use asset. These sources of cash and cash equivalents were offset by a $50.1 million increase in prepaid expenses and other assets, a $17.7 million decrease in operating lease liabilities, and a $49.6 million increase in deferred commissions.

Previous wording

Net cash and cash equivalents provided by investing activities during the three months ended March 31, 2026 consisted primarily of $487.7 million received related to the maturity of investments, offset by $358.7 million purchases of investments, $15.4 million of purchased property and equipment, $5.8 million purchases of strategic investments, $34.3 million of capitalized software development costs, $8.3 million related to business acquisitions, and $0.5 million purchases of intangible assets.

Current wording

Net cash and cash equivalents provided by investing activities during the six months ended June 30, 2026 consisted primarily of $900.8 million received related to the maturity of investments, offset by $358.7 million purchases of investments, $35.1 million of purchased property and equipment, $13.9 million purchases of strategic investments, $74.3 million of capitalized software development costs, $27.4 million related to business acquisitions, and $0.5 million purchases of intangible assets.

Previous wording

Net cash and cash equivalents provided by investing activities during the three months ended March 31, 2025, consisted primarily of $674.4 million purchases of investments, $13.3 million of purchased property and equipment, $11.0 million purchases of strategic investments, $51.4 million related to business acquisitions, and $30.4 million of capitalized software development costs. These uses of cash were offset by $803.1 million received related to the maturity of investments.

Current wording

Net cash and cash equivalents provided by investing activities during the six months ended June 30, 2025 consisted primarily of $1.3 billion received related to the maturity of investments, offset by $830.2 million purchases of investments, $29.4 million of purchased property and equipment, $18.8 million purchases of strategic investments, $69.8 million related to business acquisitions, and $65.9 million of capitalized software development costs.

Previous wording

For the three months ended March 31, 2026 cash used in financing activities consisted of $206.7 million used for repurchases of our common stock, $3.2 million used for payment of employee taxes related to the net share settlement of stock-based awards, and $2.6 for payment of debt issuance costs, offset by $16.3 million of proceeds related to issuance of common stock under stock plans.

Current wording

For the six months ended June 30, 2026 cash used in financing activities consisted of $742.9 million used for repurchases of our common stock, $5.4 million used for payment of employee taxes related to the net share settlement of stock-based awards, and $2.6 million for payment of debt issuance costs, offset by $23.2 million of proceeds related to issuance of common stock under stock plans.

Previous wording

For the three months ended March 31, 2025, cash provided in financing activities consisted of $19.3 million of proceeds related to issuance of common stock under stock plans, offset by $9.1 million used for payment of employee taxes related to the net share settlement of stock-based awards and $90.6 million for repayments of the 2025 Notes attributable to the principal.

Current wording

For the six months ended June 30, 2025 cash used in financing activities consisted of $125.0 million used for repurchases of our common stock, $459.8 million for repayments of the 2025 Notes attributable to the principal, and $13.8 million used for payment of employee taxes related to the net share settlement of stock-based awards, offset by $38.7 million of proceeds related to issuance of common stock under stock plans.

Previous wording

Contractual obligations are cash that we are obligated to pay as part of certain contracts that we have entered during our course of business. Our contractual obligations consist of operating lease liabilities that are included in our consolidated balance sheet and vendor commitments associated with agreements that are legally binding. As of March 31, 2026, the total obligation for operating leases was $296.6 million, of which $54.4 million is expected in the next twelve months. As of March 31, 2026, our vendor commitment was $415.1 million, of which $248.1 million is expected in the next twelve months. See Note 12 for all obligations the Company is committed to in the notes to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

Contractual obligations are cash that we are obligated to pay as part of certain contracts that we have entered during our course of business. Our contractual obligations consist of operating lease liabilities that are included in our consolidated balance sheet and vendor commitments associated with agreements that are legally binding. As of June 30, 2026, the total obligation for operating leases was $283.8 million, of which $54.2 million is expected in the next twelve months. As of June 30, 2026, our vendor commitment was $415.9 million, of which $275.9 million is expected in the next twelve months. See Note 12 for all obligations the Company is committed to in the notes to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.